-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EV9Lz/gJ64n7FmB1/5sNT1ao2EPTq8tIrlr4EMZugARvSlSwBCZ5FkOKNB9zQcro wFmWzpIFk0aWczCORDomyA== 0000912057-96-004219.txt : 19960311 0000912057-96-004219.hdr.sgml : 19960311 ACCESSION NUMBER: 0000912057-96-004219 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960131 FILED AS OF DATE: 19960308 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLOW INTERNATIONAL CORP CENTRAL INDEX KEY: 0000713002 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT, NEC [3569] IRS NUMBER: 911104842 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12448 FILM NUMBER: 96532815 BUSINESS ADDRESS: STREET 1: 23500 64TH AVE S STREET 2: P O BOX 97040 CITY: KENT STATE: WA ZIP: 98032 BUSINESS PHONE: 2068503500 MAIL ADDRESS: STREET 1: 23500 64TH AVENUE SOUTH CITY: KENT STATE: WA ZIP: 98032 FORMER COMPANY: FORMER CONFORMED NAME: FLOW SYSTEMS INC DATE OF NAME CHANGE: 19890320 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission file number 2-81315 FLOW INTERNATIONAL CORPORATION DELAWARE 91-1104842 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 23500 - 64TH AVENUE SOUTH KENT, WASHINGTON 98032 (206) 850-3500 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . -------- ---- The number of shares outstanding of common stock, as of March 5, 1996: 14,477,119 shares. FLOW INTERNATIONAL CORPORATION INDEX PAGE Part I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets - January 31, 1996 and April 30, 1995. . . . . . . . . . 3 Condensed Consolidated Statements of Income - Three Months Ended January 31, 1996 and 1995 . . . . . 4 Condensed Consolidated Statements of Income - Nine Months Ended January 31, 1996 and 1995. . . . . . 5 Condensed Consolidated Statements of Cash Flows - Nine Months Ended January 31, 1996 and 1995. . . . . . 6 Notes to Condensed Consolidated Financial Statements . . 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . 8 Part II - OTHER INFORMATION Item 1. Legal Proceedings . . . . . . . . . . . . . . . . 10 Item 2. Changes in Securities . . . . . . . . . . . . . . 10 Item 3. Defaults Upon Senior Securities . . . . . . . . . 10 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . 10 Item 5. Other Information . . . . . . . . . . . . . . . . 10 Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . 10 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 11 - 2 - FLOW INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)
January 31, April 30, 1996 1995 ---- ---- (unaudited) ASSETS ------ Current Assets: Cash $ 2,157 $ 1,074 Trade Accounts Receivable, less allowances for doubtful accounts of $1,194 and $1,150, respectively 33,081 31,638 Inventories 35,198 27,219 Deferred Income Taxes 2,847 1,335 Other Current Assets 5,529 4,719 --------- --------- Total Current Assets 78,812 65,985 Property and Equipment, net 25,552 24,533 Intangible Assets, net of accumulated amortization of $3,029 and $2,275, respectively 14,166 13,361 Other Assets 4,384 1,605 --------- --------- $122,914 $105,484 --------- --------- --------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current Liabilities: Notes Payable to Banks $ 2,852 $ 1,614 Current Portion of Long-Term Obligations 2,844 798 Accounts Payable 10,569 12,221 Accrued Payroll and Related Liabilities 3,971 3,542 Other Accrued Taxes 441 638 Other Accrued Liabilities 5,885 2,580 ------- ------- Total Current Liabilities 26,562 21,393 Long-Term Obligations 40,862 33,359 Deferred Income Taxes - 248 Minority Interest 755 681 Stockholders' Equity: Series A 8% Convertible Preferred Stock - $.01 par value, $500 liquidation preference, 1,000,000 shares authorized, 0 issued Common Stock - $.01 par value, 20,000,000 shares authorized 14,739,272 and 14,462,869 shares issued and outstanding, respectively, at January 31, 1996 14,603,233 and 14,326,830 shares issued and outstanding, respectively, at April 30, 1995 147 146 Capital in Excess of Par 37,741 37,602 Retained Earnings 16,473 11,456 Treasury Common Stock of 276,403 shares at cost (556) (556) Cumulative Translation Adjustment 1,041 1,339 Loan to Employee Stock Ownership Plan and Trust (111) (184) ------- ------- Total Stockholders' Equity 54,735 49,803 ------- ------- $122,914 $105,484 -------- -------- -------- --------
See Accompanying Notes to Condensed Consolidated Financial Statements - 3 - FLOW INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited; in thousands, except per share data)
Three Months Ended January 31, --------------------- 1996 1995 Revenue: Sales $29,941 $ 21,986 Services 3,389 2,980 Rentals 2,311 2,221 ------- -------- Total Revenues 35,641 27,187 Cost of Sales: Sales 18,173 12,930 Services 2,531 2,330 Rentals 1,111 973 ------- -------- Total Cost of Sales 21,815 16,233 ------- -------- Gross Profit 13,826 10,954 Expenses: Marketing 5,702 4,089 Research and Engineering 2,178 1,782 General and Administrative 3,775 2,452 ------- -------- 11,655 8,323 ------- -------- Operating Income 2,171 2,631 Interest and Other Expense, net 826 860 ------- -------- Income Before Provision for Income Taxes 1,345 1,771 Provision for Income Taxes 194 155 ------- -------- Net Income $ 1,151 $ 1,616 ------- -------- ------- -------- Earnings Per Common and Equivalent Shares $ .08 $ .11 ------- -------- ------- -------- Average Common and Equivalent Shares Outstanding 15,074 14,474
See Accompanying Notes to Condensed Consolidated Financial Statements - 4 - FLOW INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited; in thousands, except per share data)
Nine Months Ended January 31, ------------------ 1996 1995 Revenue: Sales $82,079 $ 58,722 Services 13,857 11,605 Rentals 8,340 8,127 ------- -------- Total Revenues 104,276 78,454 Cost of Sales: Sales 48,564 33,499 Services 10,069 8,477 Rentals 3,721 3,486 ------- -------- Total Cost of Sales 62,354 45,462 ------- -------- Gross Profit 41,922 32,992 Expenses: Marketing 16,315 11,992 Research and Engineering 6,033 4,631 General and Administrative 11,156 8,078 ------- -------- 33,504 24,701 ------- -------- Operating Income 8,418 8,291 Interest and Other Expense, net 2,085 1,756 ------- -------- Income Before Provision for Income Taxes 6,333 6,535 ------- -------- Provision for Income Taxes 1,316 1,108 ------- -------- Net Income $ 5,017 $ 5,427 ------- -------- ------- -------- Earnings Per Common and Equivalent Shares $ .33 $ .38 ------- -------- ------- -------- Average Common and Equivalent Shares Outstanding 15,095 14,327
See Accompanying Notes to Condensed Consolidated Financial Statements - 5 - FLOW INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited; in thousands)
Nine Months Ended January 31, -------------------------- 1996 1995 Cash Flows from Operating Activities: Net Income $ 5,017 $ 5,427 Adjustments to Reconcile Net Income to Cash Provided (Used) by Operating Activities: Depreciation and amortization 5,119 3,563 Other 73 69 Increase in assets (13,645) (1,462) Decrease in liabilities (91) (892) ------- ------ Cash (used) provided by operating activities (3,527) 6,705 ------- ------ Cash Flows from Investing Activities: Expenditures for property and equipment (6,419) (4,459) Payment for business combinations, net of cash acquired (186) (11,470) Other 1,047 (174) ------- ------- Cash used by investing activities (5,558) (16,103) ------- ------- Cash Flows from Financing Activities: Borrowings under line of credit agreements 99,811 62,463 Repayments under line of credit agreements (96,176) (62,643) Proceeds from private debt placement 15,000 Financing for business combinations 12,364 Payments of long-term debt (8,309) (3,675) Proceeds from issuance of common stock 140 143 -------- --------- Cash provided by financing activities 10,466 8,652 -------- --------- Effect of exchange rate changes on cash (298) 22 -------- -------- Increase (decrease) in cash and cash equivalents 1,083 (724) Cash and cash equivalents at beginning of period 1,074 1,351 -------- -------- Cash and cash equivalents at end of period $ 2,157 $ 627 -------- -------- -------- -------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Fair value of assets acquired $ 2,860 $19,839 Cash paid and stock issued for assets acquired (597) (14,585) -------- ------- Liabilities assumed $ 2,263 $ 5,254 -------- ------- -------- -------
See Accompanying Notes to Condensed Consolidated Financial Statements - 6 - FLOW INTERNATIONAL CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Nine Months Ended January 31, 1996 (unaudited) 1. In the opinion of the management of Flow International Corporation (the "Company"), the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position, statements of income, and cash flows for the interim periods presented. These interim financial statements should be read in conjunction with the April 30, 1995 consolidated financial statements. 2. Primary earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding plus the equivalent shares attributable to dilutive stock options during each period. The weighted average number of shares outstanding, including equivalent shares where required, for the three months ended January 31, 1996 and 1995 were 15,074,000 and 14,474,000, respectively, and for the nine months ended January 31, 1996 and 1995 were 15,095,000 and 14,327,000, respectively. Fully diluted earnings per share do not differ materially from primary earnings per share. 3. Inventories consist of the following: (in thousands)
JANUARY 31, 1996 APRIL 30, 1995 ---------------- -------------- Raw Materials and Parts $20,267 $15,794 Work in Process 7,556 4,432 Finished Goods 7,375 6,993 ------- ------- $35,198 $27,219 ------- ------- ------- -------
4. In September 1995, the Company signed a five-year secured revolving credit agreement with its principal bank to refinance its domestic borrowings and to provide a source of available cash. The new financing arrangement comprises a $60 million reducing line of credit. In September 1995, the Company also completed a ten-year $15 million private placement of debt financing. The revolving credit agreement and private debt financing require the Company to comply with certain financial covenants. As of January 31, 1996, the Company was in compliance with all such covenants. 5. In May 1995, the Company invested in a joint venture with Okura & Co., Ltd., its exclusive Japanese distributor. The Company is the majority partner of the joint venture, Flow Japan Corporation. 6. In January 1996, the Company elected to enter into an arrangement providing for the prepayment and discharge of certain royalty and other obligations relating to the acquisition of its Power Climber subsidiaries. - 7 - FLOW INTERNATIONAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Total revenues for the three months ended January 31, 1996 were $35,641,000, an increase of 31%, or $8,454,000, compared to the like period in the prior year. Year-to-date, total revenues were $104,276,000, an increase of 33%, or $25,822,000, compared to the first nine months of fiscal 1995. The increase for the quarter and year-to-date compared to the like period in the prior year was attributable to revenue growth in the Company's ultrahigh- pressure (UHP) business and access systems business. UHP revenues increased approximately 32% for the quarter and 41% year-to-date compared to the prior year, while access systems revenues increased approximately 27% for the quarter and 16% year-to-date compared to the prior year. The Company's UHP European operations recorded an 85% increase in revenues over the same quarter of fiscal 1995. Gross profit as a percentage of revenues (gross margin rate) decreased from 40% in the third quarter of fiscal 1995 to 39% in the third quarter of fiscal 1996. Year-to-date, gross profit as a percentage of revenues decreased from 42% in fiscal 1995 to 40% in fiscal 1996. Comparison of gross margin rates is dependent on the mix of revenue types, which includes sales, services, and rentals; and the mix of spare parts and systems in sales revenues. The decrease in gross margin rate for the quarter was primarily due to the lower gross margin rate on the complex systems involving the robotics technology acquired in the third quarter of fiscal 1995 and the under-capacity utilization of the robotics unit. Robotics systems typically carry lower gross margin rates than the Company's pump, spare parts, and access systems businesses. Operating expenses of $11,655,000 increased $3,332,000 for the quarter ended January 31, 1996, compared to the same quarter of the prior year. Operating expenses for the third quarter of fiscal 1996 were 33% of revenues, compared to 31% in the third quarter of fiscal 1995. Operating expenses during the third quarter included costs associated with reshaping the Company's robotics unit and other organizational expense reductions. Year-to-date, operating expenses totalled $33,504,000 for fiscal 1996, compared to $24,701,000 for fiscal 1995. Operating expenses were approximately 32% of revenues year-to- date for fiscal 1996 and fiscal 1995. The acquisitions made during the second half of fiscal 1995 and a Japanese joint venture created during the first quarter of fiscal 1996 contributed significantly to the increase in operating expenses for the quarter and year-to-date compared to the like periods of the prior year. Third quarter fiscal 1996 interest and other expense, net, of $826,000 represented a decrease of $34,000 compared to the prior year. Year-to-date, interest and other expense, net, totalled $2,085,000 for fiscal 1996, an increase of $329,000 compared to the same period in fiscal 1995. Included in current quarter and year-to-date interest and other expense, net, is approximately $130,000 and $650,000, respectively, of additional interest related to increased borrowings to finance the fiscal 1995 acquisitions and a joint venture during the first quarter of fiscal 1996. - 8 - FLOW INTERNATIONAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Income tax expense was lower than the statutory rate primarily due to lower foreign tax rates, benefits from the foreign sales corporation, and a change in the Company's FAS 109 valuation allowance. The number of average shares outstanding in the fiscal 1996 third quarter was 15,074,000 compared to 14,474,000 in the like quarter a year ago. Year-to- date, the average number of shares outstanding increased from 14,327,000 for fiscal 1995 to 15,095,000 for fiscal 1996. As a result of the above, the Company recorded net income of $1,151,000, or 8 cents per share for the three months ended January 31, 1996, compared to $1,616,000, or 11 cents per share for the same period in the prior year. Year- to-date, net income for fiscal 1996 totalled $5,017,000, or 33 cents per share, compared to $5,427,000, or 38 cents per share, for fiscal 1995. LIQUIDITY AND CAPITAL RESOURCES Net cash used by operating activities was $3.5 million for the nine months ended January 31, 1996, primarily due to an increase in inventory, a negotiated prepayment of a royalty agreement, an increase in accounts receivable, deferred taxes, and other assets. Net cash provided by operating activities was $6.7 million during the same period a year ago. In September 1995, the Company signed a five-year secured credit agreement with its principal bank, US Bank of Washington N.A., to refinance its domestic borrowings and to provide a source of available cash. The new financing arrangement comprises a $60 million reducing line of credit. In September 1995, the Company also completed a ten-year $15 million private placement of debt financing. The Company believes that the new financings, together with other available credit facilities, will provide sufficient resources to meet its operating and capital requirements in the foreseeable future. The revolving credit agreement and private debt financing require the Company to comply with certain financial covenants. As of January 31, 1996, the Company was in compliance with all such covenants. Gross trade receivables at January 31, 1996 increased by $1.5 million, or 5%, from April 30, 1995. Days sales outstanding in gross accounts receivable can be attributed to higher foreign sales where account payment terms are typically longer than in the United States, and special payment terms negotiated on large system orders. The Company's management does not believe these timing issues will result in a material adverse impact on the Company's short-term liquidity requirements. Inventories at January 31, 1996 increased $8.0 million, or 29%, from April 30, 1995, primarily related to the higher levels of business and the inclusion of the newly formed joint venture. Certain products manufactured by the Company's robotic and automation divisions require an extended manufacturing period, and therefore involve higher levels of work in process. - 9 - FLOW INTERNATIONAL CORPORATION PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS The Company is party to various legal actions incident to the normal operations of its business, none of which is believed to be material to the financial condition of the Company. Item 2. CHANGES IN SECURITIES None Item 3. DEFAULTS UPON SENIOR SECURITIES None Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None Item 5. OTHER INFORMATION None Item 6. EXHIBITS AND REPORTS ON FORM 8-K None - 10 - FLOW INTERNATIONAL CORPORATION SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FLOW INTERNATIONAL CORPORATION Date: March 6, 1996 /s/ Ronald W. Tarrant --------------------- Ronald W. Tarrant Chairman, President and Chief Executive Officer (Principal Executive Officer) Date: March 6, 1996 /s/ Elaine P. Scherba --------------------- Elaine P. Scherba Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) - 11 - EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS APR-30-1996 MAY-01-1996 JAN-31-1996 2,157 0 34,275 1,194 35,198 78,812 55,519 29,967 122,914 26,562 0 0 0 147 54,588 122,914 82,079 104,276 48,564 95,858 (505) 44 2,590 6,333 1,316 5,017 0 0 0 5,017 .33 .33
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